Russian Oil Ban: What It Could Mean For Gas Prices In CA

CALIFORNIA — President Joe Biden banned Russian oil imports to the United States in response to that country's invasion of Ukraine, he announced Tuesday. The move came as California's regular gasoline prices soared past the historic $5 per gallon mark this week — and the price surpassed $7 per gallon for premium fuel in some areas.

"This is a step that we're taking to inflict further pain on [Russian President Vladimir] Putin," Biden said Tuesday morning. "But there will be cost as well here in the United States."

The announcement followed pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western leaders to cut off oil imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion. Energy exports have kept a steady stream of cash flowing to Russia despite otherwise severe restrictions on its financial sector.

"Putin's war is already hurting Americans at the gas pump," Biden said, adding: "and with this action it's going to go up further. ... I'm going to do everything I can to minimize Putin's price hike here at home."

Biden previously announced that the U.S. would release 16 million barrels of oil from its joint oil reserves to offset the ban's effects.

READ MORE: 10 Ways To Help Ukraine From California

Biden also urged energy companies to abstain from profiteering and price gouging.

"To all the oil and gas companies and to the finance firms at the bank: We understand Putin's war against the people of Ukraine is causing prices to rise — we get that, that's self evident — but, but, but, it's no excuse to exercise excessive price increases or padding profits or any kind of effort to exploit the situation."

In California, the average price for regular gasoline topped $5.44 on Tuesday morning and has been climbing between 9 and 12 cents daily, according to AAA.

Gas prices were already climbing to unseen levels long before Russian forces began tearing through Ukraine, but they've risen faster since the war began.

In Huntington Beach, Julian Mesa earns $15 an hour cleaning offices. On Monday, he paid $92 to fill his pickup truck at $5.79 a gallon.

"It’s very expensive, high for people who are earning the minimum" wage, Mesa said. His family had already scaled back on eating out to cut their spending during the pandemic.

The national average price for a gallon of regular gasoline topped $4 this week, the highest level since the crippling 2008 recession, AAA reported. But analysts were skeptical the embargo on Russian oil exports will have a big effect since that crude represented only about 8 percent of the United States’ foreign oil imports, according to The Wall Street Journal.

GasBuddy, which tracks prices down to the service station level, said Monday that the U.S. was likely to exceed the record price of $4.10 a gallon, but that did not account for inflation. In today's terms, the record price would be equal to about $5.24 after accounting for inflation.

“Forget the $4 per gallon mark. The nation will soon set new all-time record highs, and we could push closer to a national average of $4.50," GasBuddy analyst Patrick De Haan said. “We’ve never been in this situation before, with this level of uncertainty. ... Americans will be feeling the pain of the rise in prices for quite some time."

Biden had been reluctant to ban Russian oil imports. Two weeks ago, he explained his reluctance to impose energy sanctions by saying he wanted “to limit the pain the American people are feeling at the gas pump.”

The U.S. is acting alone in banning Russian oil exports but was in close consultation with European allies, who depend on Russia for one-third of their fossil fuel supplies. The United States does not import natural gas from Russia.

Inflation is at a 40-year peak, fueled in large part by gas prices, and that could hurt Biden heading into the November midterm elections.

“The United States economy can fully handle any of the challenges associated with higher oil prices,” Jason Furman, a Harvard University professor and former top economic adviser to President Barack Obama. “But it will bring some challenges. We’re going to have higher prices at the pump, and there’s no way around that.”

The Associated Press contributed to this report.

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